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Last week, President Obama made a startling concession to the Republican Party: that he would accept a piecemeal approach to overhauling America’s immigration system. “If they want to chop that thing up into five pieces, as long as all five pieces get done, I don’t care what it looks like,” Obama said.

This is startling because, for the past few years, Democratic Party leaders have insisted on an all-or-nothing approach to immigration. They would not agree to increase the numbers of visas for skilled workers unless the Republicans agreed to legalize the more than 10 million immigrants who are in the country without documentation. The Republicans refused to provide “amnesty” to the unskilled, so the Democrats let the skilled immigrants — and US competitiveness — suffer. This is no different from the juvenile behaviour you see in the Indian Parliament.

The President realizes the political reality and is trying to get whatever he can through the system. But it is unlikely that he will have any success on immigration, because House leaders are still reeling from their loss on the fiscal shutdown and will not hand the President any kind of political victory.

This is bad for the US but is good news for India. That’s because the US has been giving India, China, and many other countries an unintended gift: highly educated and skilled workers with experience in US markets. It has been sending would-be immigrants back home; exporting its competitive edge.
Skilled immigrants made America into a technology superpower. Wave after wave came to America’s shores and brought with them their education, knowledge of global markets, and determination to achieve success. They made the natives think smarter and work harder and contributed to practically all of its technology breakthroughs.

My research team at Duke, Harvard, and UC-Berkeley documented that from 1995 to 2005, immigrants founded 52% of Silicon Valley startups, and 25% of startups nationwide. They contributed to 72% of the WIPO (World Intellectual Property Organization) patents filed by Qualcomm, 65% of those by Merck, 64% of General Electric, and 60% of Cisco Systems. Indians also co-author 13.7% of America’s global patents. Indians have founded 33.2% of Silicon Valley’s immigrant-founded startups — more than immigrants from any other ten countries combined have, including China, the UK, Canada, Germany, Israel, and Russia.

Despite this amazing contribution, the US is allowing itself to bleed competitiveness. It admits hundreds of thousands of students and workers on H1-B visas, but doesn’t provide enough permanent-resident visas to let these skilled foreigners make the US their new home. The result is that there are more than a million skilled immigrants and their families stuck in “immigration limbo”.

I explained the reverse brain drain that is in progress and the consequences of this in my book The Immigrant Exodus: Why America Is Losing the Global Race to Capture Entrepreneurial Talent. In a nutshell, because of improving opportunities in countries such India, China, and Brazil — and out of frustration with the delay in visa processing — the tide has turned. Skilled workers are returning home in record numbers. In research that my group at Stanford completed recently, we found that the proportion of companies founded in Silicon Valley from 2006 to 2012 that had been founded by immigrants had fallen to 44%. This was not because immigrants had become less entrepreneurial, but because they could not get the visas necessary for starting companies.

America’s loss has been a huge gain for other countries. If you visit any top Chinese research lab, you will find returnees from the US at their helm. The tech centres of both India and China are growing rapidly with the infusion of Silicon Valley-trained talent. These returnees are bringing America’s best practices and entrepreneurial culture back home with them.

American leaders are well aware of the damage that the brain drain is doing to US competitiveness. The President has cited my research in his speeches, and I have been asked to testify to both the House and Senate. The problem is that in addition to the issue of amnesty, there is also a xenophobic element in the US that wants to keep foreigners out. And there are technology workers prevented from getting jobs by their location, age, or skills. They are all rallying against immigrants and complicating the factional battles in Congress. This is creating the stalemate.

So India may be suffering from its own political quagmires, but it is benefiting from America’s.